Question 5:
Mohan &
Co. purchased machinery for `21,000
on 1st April, 2022. The estimated useful life of the machinery is 10 years,
after which its realisable value will be `1,000. Determine the amount of annual depreciation according
to the Straight Line Method and prepare Machinery Account for the first three
years. The books of account are closed on 31st March every year.
Answer:
|
Book
of Mohan & Com. Machinery
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||
|
2021 |
|
|
|
2021 |
|
|
|
||
|
April 01 |
Bank A/c |
|
21,000 |
Mar.31 |
Depreciation A/c |
|
2,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
19,000 |
||
|
|
|
|
21,000 |
|
|
|
21,000 |
||
|
2022 |
|
|
|
2022 |
|
|
|
||
|
April 01 |
Balance b/d |
|
19,000 |
Mar.31 |
Depreciation A/c |
|
2,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
17,000 |
||
|
|
|
|
19,000 |
|
|
|
19,000 |
||
|
2023 |
|
|
|
2025 |
|
|
|
||
|
April 01 |
Balance b/d |
|
17,000 |
Mar.31 |
Depreciation A/c |
|
2,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
15,000 |
||
|
|
|
|
17,000 |
|
|
|
17,000 |
||
|
|
|
|
|
|
|
|
|
||
Question 6:
1st April, 2022, Starex purchased a machine costing `4,00,000 and spent `50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be `50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year.
Answer:
|
Book
of X Ltd. Machinery
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||
|
2022 |
|
|
|
2022 |
|
|
|
||
|
April 01 |
Bank |
|
4,00,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
April 01 |
Bank (Erection
Expense) |
|
50,000 |
|
Balance c/d |
|
4,10,000 |
||
|
|
|
|
4,50,000 |
|
|
|
4,50,000 |
||
|
2022 |
|
|
|
2023 |
|
|
|
||
|
April 01 |
Balance b/d |
|
4,10,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
|
|
|
|
|
Balance c/d |
|
3,70,000 |
||
|
|
|
|
4,10,000 |
|
|
|
4,10,000 |
||
|
2023 |
|
|
|
2025 |
|
|
|
||
|
April 01 |
Balance b/d |
|
3,70,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
|
|
|
|
|
Balance c/d |
|
3,30,000 |
||
|
|
|
|
3,70,000 |
|
|
|
3,70,000 |
||
|
|
|
|
|
|
|
|
|
||
Calculation of Depreciation:
Depreciation p.a.=4,00,000+50,000-50,000(Scrap Value)10 years
= `40,000 p.a.
Question 7:
On 1st April, 2021, furniture costing `55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for `5,000. Additions are made on 1st April 2022 and 1st October, 2024 to the value of `9,500 and `8,400 (Residual values `500 and `400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.
Answer:
|
Furniture
Account |
|||||||||||
|
Dr. |
|
Cr. |
|||||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||||
|
2021 |
|
|
|
2021 |
|
|
|
||||
|
April
01 |
Bank (F1) |
|
55,000 |
March
31 |
Depreciation
(F1) |
|
5,000 |
||||
|
|
|
|
|
March
31 |
Balance c/d (F1) |
|
50,000 |
||||
|
|
|
|
55,000 |
|
|
|
55,000 |
||||
|
2021 |
|
|
|
2022 |
|
|
|
||||
|
April
01 |
Balance b/d (F1) |
|
50,000 |
March
31 |
Depreciation |
|
|
||||
|
April
01 |
Bank (F2) |
|
9,500 |
|
F1 |
5,000 |
|
|
|||
|
|
|
|
|
|
F2 |
900 |
|
5,900 |
|||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
45,000 |
|
|
|||
|
|
|
|
|
|
F2 |
8,600 |
|
53,600 |
|||
|
|
|
|
59,500 |
|
|
|
59,500 |
||||
|
2022 |
|
|
|
2023 |
|
|
|
||||
|
April
01 |
Balance b/d |
|
|
March
31 |
Depreciation |
|
|
||||
|
|
F1 |
45,000 |
|
|
|
F1 |
5,000 |
|
|
||
|
|
F2 |
8,600 |
|
53,600 |
|
F2 |
900 |
|
5,900 |
||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
40,000 |
|
|
|||
|
|
|
|
|
|
F2 |
7,700 |
|
47,700 |
|||
|
|
|
|
53,600 |
|
|
|
53,600 |
||||
|
2023 |
|
|
|
2025 |
|
|
|
||||
|
April
01 |
Balance b/d |
|
|
March
31 |
Depreciation |
|
|
||||
|
|
F1 |
40,000 |
|
|
|
F1 |
5,000 |
|
|
||
|
|
F2 |
7,700 |
|
47,700 |
|
F2 |
900 |
|
|
||
|
Oct.
01 |
Bank (F3) |
|
8,400 |
|
F3 |
400 |
|
6,300 |
|||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
35,000 |
|
|
|||
|
|
|
|
|
|
F2 |
6,800 |
|
|
|||
|
|
|
|
|
|
F3 |
8,000 |
|
49,800 |
|||
|
|
|
|
56,100 |
|
|
|
56,100 |
||||
|
|
|
|
|
|
|
|
|
||||
Working Notes:
Drepreciation
on Furniture 1=55,000-5,000(Scrap Value)/10 Year= `5,000 p.a.
Drepreciation
on Furniture 2=9,500-500(Scrap Value)/10 Year= `900 p.a.
Drepreciation
on Furniture 3=8,400-400(Scrap Value)/10 Year= `800 p.a.
Depreciation on Furniture(for 6 Month)=800×6/12= `400
Question
8:
On 1st
April, 2018, a company purchased a machinery for ₹1,05,000.
The scrap value was estimated to be ₹5,000 at the end of asset's 10
years' life. Straight Line Method of depreciation was used. The accounting year
ends on 31st March every year. The machine was sold for ₹ 6,000 on 31st
March, 2025. Calculate the following:
(i) The Depreciation expense for the year ended 31st March,
2019.
(ii) The net
book value of the asset on 31st March, 2023.
(iv) The
gain or loss on sale of the machine on 31st March, 2025.
Answer:
(i) The Depreciation expense for the year ended 31st March,
2019.
Formula
for calculating depreciation = Cost of asset - Residual value of asset / Life
expectancy
Depreciation
for 2018-19 = ₹1,05,000 -
₹5,000÷10=₹10,000
(ii) The net
book value of the asset on 31st March, 2023.
Depreciation
for 5 year from 2018 to 2023= ₹10,000×5=₹50,000
Net book
value of the asset on 31st March, 2023 = ₹1,05,000
-₹50,000= ₹55,000
(iv) The
gain or loss on sale of the machine on 31st March, 2025.
Depreciation
for 7 year from 2018 to 2025= ₹10,000×5=₹70,000
Net book
value of the asset on 31st March, 2025 = ₹1,05,000
-₹70,000= ₹35,000
Asset sold
for ₹6,000
Loss on sale o the machine = ₹6,000
- ₹35,000 = ₹29,000
Click below for more Questions
Ts Grewal Solution 2025-2026
Class 11th